Business Associations

A.G. Dillard, Inc. v. Stonehaus Construction, LLC

Supreme Court of Virginia, 2016


A.G. Dillard won a judgment against Stonehaus, an LLC controlled by Hauser, but Stonehaus was legally insolvent. A.G. Dillard then sued Hauser and his various LLCs to pierce Stonehaus's corporate veil and reach the other defendants' assets.

A.G. Dillard claimed that Hauser owed Stonehaus more than $160,000, but Stonehaus made no effort to collect his debt, that Stonehaus ceased holding its own funds after A.G. Dillard's suit recommenced after negotiation, and that it instead transfered the funds to another A.G. Dillard LLC for no valuable consideration.

Procedural History:

Circuit court sustained the defendants' demurrer because A.G. Dillard's action did not identify its veil piercing targets or fraudulent conveyances with enough specificity.


  • Can A.G. Dillard pierce Stonehaus's corporate veil?

  • Does A.G. Dillard need to state the fraudulent conveyance claim with the same specificity as common law fraud?


  • WestLaw LogoPage 2

    Generally, when a plaintiff has a claim against a limited liability company, the plaintiff may only pursue that claim against the limited liability company itself and not its members.

    However, in rare instances, a limited liability company's corporate veil may be pierced to hold a member personally liable. We have held that while there is no single rule or standard and the determination is fact-specific, “when the unity of interest and ownership is such that the separate personalities of the corporation and the individual no longer exist and to adhere to that separateness would work an injustice” it is appropriate to pierce the corporate veil.

  • The same factors apply for a reverse veil piercing to hold a company liable for a shareholder's personal liabilities.


  • A.G. Dillard seeks to hold Hauser's other LLCs liable for Stonehaus's liabilities. To do this, he allege sufficient facts both to pierce Stonehaus's corporate veil to reach Hauser and to pierce his other LLCs' veils in reverse.

    A.G. Dillard's claim that Hauser owed Stonehaus over $160,000 but did not try to collect and that Stonehaus had no assets imply that Stonehaus and Hauser are not separate personalities. It implicitly alleged that considering them as discrete parties would cause an injustice to A.G. Dillard. Therefore, the complaint stated a claim to pierce Stonehaus's corporate veil to reach Hauser.

    It must then be considered whether A.G. Dillard alleged a claim to reverse pierce the corporate veils of his other companies. The complaint alleges that Hauser is a member of each of the companies and that they operate and advertise as a single entity and share funds among themselves. This would imply that Hauser controls the other companies like he does Stonehaus, and thus reverse veil piercing would be appropriate.

  • Fraudulent conveyance claims do not require the same level of specificity as common law fraud claims. The statute expands fraudulent conveyance claims to include those which delay or hinder creditors, so it was intended to expand it beyond the common law and should not be based on it.

    A.G. Dillard's complaint alleged multiple badges of fraud when only one was needed. No greater specificity is needed.


  • Yes, A.G. Dillard can horizontally pierce the corporate veil.

  • No, A.G. Dillard's complaint was sufficiently specific on its fraudulent conveyance claim.


Reversed except for the piercing the corporate veil claim on Hauser's wife and remanded.